Doctor innovation Shaking up the health system - Commissioned by Philips
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Doctor innovation
Shaking up the
health system
Commissioned by Philips
The second report in a series of four from the Economist Intelligence Unit
Doctor innovation
Shaking up the health system
Contents
Preface 2
Executive summary 3
The healthcare innovation environment 5
Going slow on the information superhighway 10
Share data to know what works 11
Data mining in Minnesota 11
Let entrepreneurs get on with it 14
Privatised screening 14
Innovation in India’s eye care 16
Put the patient back in the centre 18
Western Germany’s integrated headache remedy 19
Patients doing it for themselves 21
Conclusion 25
© The Economist Intelligence Unit Limited 2009
Doctor innovation
Shaking up the health system
Preface
D octor innovation: Shaking up the health system is an Economist Intelligence Unit report,
commissioned by Philips, the second in a series of four to be published in 2009. The Economist
Intelligence Unit bears sole responsibility for the content of this report. The findings and views
expressed within do not necessarily reflect the views of Philips.
This paper, a sequel to Fixing Healthcare, which was published in March 2009, focuses on the
organisational and structural impediments that have been hindering innovation in healthcare
outcomes—and considers several specific case studies that illustrate how such barriers might be
overcome.
It is based on a number of interviews with leading experts and senior executives as well as
extensive desk research. It also draws on a survey of 775 healthcare professionals from the US, UK,
Germany, and India. The report was written by Dr Paul Kielstra and edited by Gareth Lofthouse, Iain
Scott, and James Watson.
We would like to thank everyone who participated in the survey, and all the interviewees, for their
time and insight. The following individuals were interviewed for the study:
Dr Natalie-Jane Macdonald, UK managing director, BUPA, UK
Stephan Gutzeit, executive director, Stiftung Charité, Berlin, Germany
Simon Stevens, president of global health, UnitedHealth Group, USA
Professor Elizabeth Teisberg, University of Virginia, USA
Professor Bernard Crump, CEO, NHS Institute for Innovation and Improvement, UK
Dr Volker Amelung, president, German Managed Care Association and Professor for International
Healthcare System Research, Medical University of Hannover, Germany
Dr James Morrow, director of medical operations, New Medical Limited, UK
Dr Jennifer Dixon, director, Nuffield Trust, UK
Jim Chase, executive director, Minnesota Community Measurement, USA
Dr P. Namperumalsamy, chairman, Aravind Eye Care System, India
Susannah Fox, associate director, digital strategy, Pew Internet & American Life Project, USA
Erika S. Fishman, director of research, Manhattan Research, USA
Professor Vinayshil Gautam, Indian Institute of Technology, New Delhi, India
© The Economist Intelligence Unit Limited 2009
Doctor innovation
Shaking up the health system
Executive summary
A sked to picture healthcare in the twenty-first century, readers might imagine scientists applying
the latest breakthrough in biotechnology as a radical cure for disease. But equally, they might also
think of lengthy waiting lists, shabby wards and lumberingly bureaucratic administrative systems.
This dichotomy is one of the biggest problems confronting policymakers and managers when they
look at today’s health sector. Advances in medical science and technology have not been matched by
innovation in healthcare management and processes. It is a failure that costs taxpayers and patients
dearly. “Twenty-first century medical technology is delivered with 19th century organisational
structures,” notes Professor Elizabeth Teisberg of the University of Virginia’s Darden School of
Business. “The most powerful innovation in the coming decade will be structural and organisational—
new ways of working, new team approaches to delivering the full cycle of care.”
The problem is not a lack of ideas, as cutting-edge medical research continues apace. Nor is it
unwillingness to put money into healthcare, which consumes vast budgets. Rather, the difficulties lie
in the diverse blockages to new ideas finding their way into widespread and transformative change.
But new approaches exist which demonstrate how healthcare systems could be improved. The
Economist Intelligence Unit conducted interviews with a range of healthcare professionals and leading
experts, along with extensive desk research, to uncover several examples (profiled here as in-depth
case studies) which illustrate how organisational and structural changes can deliver clear benefits. The
research suggests that policymakers and healthcare professionals should focus on five main areas of
system innovation:
l Share information, especially on the outcome of treatments, to improve quality. Modern
healthcare systems are typically characterised by a lack of transparent, comparative data about the
costs and effectiveness of medical interventions. At a very basic level, knowing what actually works
best in given situations is central to outcomes-based medicine. But only recently, driven by cost at
least as much as by purely clinical considerations, has such data begun to be collected. In places where
this has been carried out, the results are often striking. One such example can be found in Minnesota,
where a non-profit organisation has been gathering and sharing data from participating local
healthcare providers, leading to striking improvements. For example, since 2006 the rate of childhood
immunisation has leapt from 52% to 78%. Still, although numerous similar initiatives are under way
around the world, the healthcare sector is only beginning to scratch the surface of what is possible.
l Bring outside entrepreneurship to healthcare. The inherent conservatism of health managers—
understandable, when mistakes pose such a risk to human safety—too often allows incumbents
to resist innovation that might leave them at a competitive disadvantage. This does not stop
innovation, but makes it more likely to come from incremental change by existing bodies than through
revolutionary change from outside. But it does not always have to be this way. When the UK’s National
Health Service (NHS) would not begin screening for abdominal aortic aneurysms, which kill one in 50
© The Economist Intelligence Unit Limited 2009Doctor innovation
Shaking up the health system
British men, a group of doctors formed New Medical Limited in 2002 to provide a private service. They
have since examined 15,000 people, one in 20 of whom had the condition; one in 200 required, and
received, urgent attention. Facilitating other, similar breakthroughs requires reforms that reduce the
ability of incumbents to block or deter market entrants. Entrepreneurial ideas must be judged on their
medical potential, not on the threat they pose to existing providers.
l Deliver integrated care based on medical conditions rather than provider expertise. “Patient-
centric” healthcare has been a buzzword in the industry for some time. However, it is impossible to be
patient-centric when healthcare systems are so fragmented and incentive structures do not sufficiently
reward innovation. In particular, the pay-for-service model puts too high a value on aspects of
treatment at the expense of the overall care of a patient. But there are examples of genuine progress
towards redesigning healthcare around the needs of the patient. The West German Headache Centre,
for example, provides consultations with various types of specialists, all of whom work within the
same facility and collaborate on diagnosis and treatment recommendations. Of those who have gone
through its programme, the proportion missing more than six days of work in six months has fallen by
around 80%, resulting in lower costs to the healthcare system.
l Treat patients as a source of innovation. Large organisations find it inherently difficult to remain
innovative. So it is in healthcare, where many countries operate monolithic systems. However,
although many businesses have realised that their customers can be a powerful source of new ideas
and innovations, healthcare providers seem almost instinctively to resist such an approach. Many
initially saw the spread of medical information on the Internet as a nuisance or even a risk, although
most have since come to see it as a way of enriching doctor-patient conversations. Data from the Pew
Research Centre shows that of those Americans with Internet access, 83% use it to look for health
information. These “e-patients” increasingly use social networking platforms to teach each other
about conditions and treatments. In turn, this will again change the doctor-patient relationship,
and could even create the basis for a more market-driven system where customers are able to make
informed choices about varying providers.
l Use these ideas together. The ideas and approaches reviewed in this study are not mutually
exclusive. Together, they become even more powerful. India’s Aravind Eye Care System provides
a compelling story of innovation in medicine, employing all of the advice listed above. It is
entrepreneurial in its outlook; it measures and reports outcomes data; and it is also highly integrated.
Finally, it learns from its customers: certain innovations—such as the establishment of permanent
village clinics—took place after market surveys of patient needs and service uptake.
These various examples point to innovations that get at the root of the obstacles to further
improvement of healthcare. Such ideas are not simple market prescriptions for what ails healthcare,
however much they may borrow from other sectors. They are about thinking differently in order to do
things differently. Such ideas are worthwhile not because they may or may not be based on a market-
led approach, but because they provide better healthcare.
© The Economist Intelligence Unit Limited 2009Doctor innovation
Shaking up the health system
The healthcare innovation environment
I nformation technology has promised tantalising benefits within the field of healthcare for a long
time. One academic paper reviewed for this report, entitled “The new age electronic patient record
system”, writes about this bright new innovation as being just around the corner. Such records would
help clinicians improve their decision-making and better analyse complex health problems. But the
paper, which was written in 1995, illustrates how slow-moving the industry can be, given that exactly
the same ideas and promises are still being bandied about today.
Healthcare’s apparent reluctance to adopt IT is one example epitomising its reputation for being
slow to innovate. Even the way in which healthcare is provided is firmly anchored in the past. Dr
Jennifer Dixon, director of the UK’s Nuffield Trust, notes that, despite recent changes, the British
system is “still essentially based on lines of 1948: hospitals are still hospitals, GPs are still GPs.” Across
the Atlantic, Harvard University professor Clayton Christensen and doctors Jerome Grossman and
Jason Hwang, in their book The Innovator’s Prescription: A Disruptive Solution for Health Care, describe
the traditional hospital as no longer even a viable business model: “In the absence of an array of cross-
subsidies, restraints on competition, and philanthropic life support, most of them would collapse.”
Professor Elizabeth Teisberg of the University of Virginia, and co-author of another recent bestseller,
Redefining Health Care, notes of the whole sector that it “is, in management terms, more than a decade
behind most.”
Healthcare’s poor reputation for the implementation of innovation is no secret. The Innovator’s
Prescription and Redefining Health Care are only two recent additions to a copious body of literature
pointing to the pressing need for change in how healthcare is delivered. The stakes are high: if current
trends continue, healthcare spending will leave governments bankrupt within decades.
But how did things reach this state? Healthcare should be among the most innovative sectors in
developed economies. Money, which could reward innovation, is plentiful. According to the OECD, in
2006—the latest year for which figures are available—15.3% of GDP in the US went towards health.
America is known for its high spending in this field, but the figures for Germany and the UK were still
10.6% and 8.4% respectively.
Equally, there is no shortage of spending on health research and development (R&D), and
technological roadblocks do not pose huge problems. Dr Natalie-Jane Macdonald, managing director
of UK-based private health insurance company BUPA, points to “a lot of advancement” in the last
10 years in terms of technology and techniques across a range of specialities. Nor is there a lack of
inspiration: medical professionals are typically highly trained, very committed individuals.
“There are millions of ideas,” notes Stephan Gutzeit, executive director of the Stiftung Charité in
Berlin, Germany. But, he adds, “very few people are courageous enough to innovate, especially in
healthcare.” Simon Stevens, Tony Blair’s former health policy adviser and now president of global
health at UnitedHealth Group—a US-based health management company serving 70 million people
and operating in over 50 countries—believes that in the UK’s National Health Service (NHS) it is not
© The Economist Intelligence Unit Limited 2009Doctor innovation
Shaking up the health system
mainly the supply of innovative ideas that is the problem, but the demand to then implement them.
There are indeed many ideas for ways in which healthcare can combine greater cost effectiveness
and improved patient care, including better exploitation of the possibilities of IT, integration of
services, or patient-centred care. But most of these have been around for some years. Progress has
been anything but rapid. This Economist Intelligence Unit study therefore addresses the organisational
“There are millions barriers that do so much to hold healthcare innovation back, rather than medical and technological
of ideas, [but] very advances. After looking at the interlocking factors that together impede change, we present a
few people are series of case studies that contain lessons on how the underlying blockages to innovation might be
courageous enough tackled. Finally, we consider how patients themselves are driving innovation outside of the system’s
to innovate, professional constraints.
especially in
healthcare.” Friction in the system
Stephan Gutzeit, executive
director of the Stiftung Charité, How does such a scientifically-based sector do so badly at innovation, and why, in such a well-funded
Germany sector, are costs seen as such a big barrier to improvement?
Big and fragmented: Healthcare systems in developed countries are invariably highly complex,
but not especially modern. “Twenty-first century medical technology is delivered with 19th century
organisation structures, management practices, and pricing models,” notes Professor Teisberg of
healthcare in the United States.” In particular, American healthcare is famously fragmented—by loci of
care, geography, and payment provider—impeding meaningful competition and allowing inefficiencies
to escalate costs.
Large, centralised state-run healthcare systems might in theory seem better structured to deliver
innovation, but in practice they are not. “When Americans look at the NHS, they often assume it’s a
unitary system that can be reformed by Whitehall diktat” says Mr Stevens. “But in reality there are
many of the same constraints that arise in other countries.” Professor Bernard Crump, CEO of the NHS
Institute for Innovation and Improvement, adds that “the journey to take a good idea and end up with
everyone who could be beneficially using it doing so is bewilderingly complicated.”
Large organisations are rarely good at innovating from within—they often need outsiders with
challenging, fresh ideas to drive innovation. Indeed, what Professor Crump notes of the NHS is true of
many big institutions: “Leaders haven’t been chosen, or been successful in general because of their
conspicuous leadership of innovation within their organisations. They have been successful for other
attributes.” These leaders also often have to learn on the job how to foster innovation. Large, state-
managed systems can suffer from fragmentation every bit as badly as private ones. Professor Crump
points to the very complexity of the NHS as a challenge—1.3 million employees, 500 operating entities,
and 50 million users. He likens it not so much to a whale but to a shoal of fish that swim like a whale.
Mr Gutzeit of Stiftung Charité says that “silo thinking” has long been a problem in German healthcare
organisations as well.
Data fog: An absence of transparent, comparative data about the true cost and effectiveness of
medical interventions is also an obstacle to healthcare innovation. Despite the obvious benefit of such
information for doctors and nurses who need to make decisions about treatment, medical professionals
© The Economist Intelligence Unit Limited 2009Doctor innovation
Shaking up the health system
were among the first to object to collecting comparative data. Opposition still exists. As Dr Macdonald
of BUPA notes: “The power of the healthcare provider traditionally rests in maintaining an asymmetry
of information between them and the patient. There is little incentive to empower the patient—many
feel it makes their jobs harder.”
But the absence of comparative data has led to even more fragmentation of medical care. The
treatment for a given condition can depend as much on chance factors—the specialties and interests
of the care provider, or even the region of the country in which treatment took place—as on the
optimal approach. In 1991, the Journal of the American Board of Family Practices reported on a study
“A lack of provider in which an actor, posing as a patient, described his condition to 135 doctors and was recommended
competition has 82 different treatments—implying that doctors are not relying on comparative data as a basis for
meant that the diagnosis. The collection and analysis of comparative data has advanced in the last decade or so, but
opportunity costs of Professor Teisberg of the University of Virginia notes that “not enough has been done. Measuring
not innovating are outcomes well is tricky, but the important thing is to start measuring.”
not great enough.”
Barriers and competition: In a traditional marketplace, problems like this would not matter so much.
Simon Stevens, president of
global health, UnitedHealth Large, slow-moving entities would have to innovate or face challenges from hungry new entrants.
Group
But healthcare systems in developed countries have proved remarkably resistant to innovation from
outside. In part, explains Mr Stevens of UnitedHealth, hospital provider market concentration means
that, unlike other parts of the economy, most improvement occurs through incremental efficiency
gains by incumbents, rather than from new entrants deploying radically improved methods. “Arguably,
a lack of effective provider competition has meant that the opportunity costs of not innovating are not
great enough,” he says. Similarly, in the UK, Dr Macdonald notes that existing value locked up in the
delivery models of incumbent providers makes it difficult to introduce new healthcare delivery in the
UK with any scale. “It is a very inefficient market,” she says.
All too often, the problem for innovators coming from outside is that insiders can resist changes
that threaten their interests. If an innovator gains a competitive advantage over the existing system,
then “a new law will change it, so nobody is willing to invest,” says Dr Volker Amelung, president of the
German Managed Care Association and professor for International Healthcare System Research at the
Medical University of Hannover. In a 2006 Harvard Business Review article, “Why Innovation in Health
Care Is So Hard”, Professor Regina Herzlinger of Harvard University points to numerous American
examples where incumbents, from local doctors to large hospitals, have sent innovative competitors
packing with the help of regulators or politicians. Often, Professor Herzlinger writes, the argument was
not even the quality of the care provided by new entrants so much as that their cheaper, more efficient
specialty services were siphoning off profits needed to subsidise other types of care. The healthcare
industry spent US$481 million lobbying the US government in 2008—the most by any sector and a 73%
1
OpenSecrets.org, increase over five years1. The American Medical Association (AMA) alone spent US$200 million. This
Lobbying: Ranked Sectors
sort of money is rarely laid out solely to advance the public good over private interests.
2008. https://www.
opensecrets.org/lobby/top.
The environment for outsiders is equally hostile in the UK, even with the government actively trying
php?showYear=2008& to instil competition within the healthcare service. “Huge pressure is applied when anybody tries
indexType=c to enter the market with a new model,” confirms Dr Macdonald of BUPA. “They get squashed by the
© The Economist Intelligence Unit Limited 2009Doctor innovation
Shaking up the health system
existing players whose incentive is to maintain the status quo.” Dr James Morrow, a Cambridgeshire
GP, experienced at first hand the challenges of innovating within and outside the system when he
co-founded New Medical Limited in 2002. Any true healthcare innovation, he has found, has to battle
against a system designed to resist change. “Very few ideas have the stamina,” he says. “People give
up because it becomes too difficult.” He is not alone. Professor Crump of the NHS says that successful
champions of innovation within the UK’s health service tend to talk in terms of battles they have had to
fight to overcome inherent facets of the system.
This resistance to change is all the more powerful because healthcare as a whole, including its
regulators, is inherently risk averse. One of the first things learned by every medical student is the
precept, “first, do no harm”, which underlines the notion that a novel approach that goes wrong could
have fatal consequences. This caution is extended beyond the walls of medical schools. “Officials know
they will be punished by the public and politicians more for under-regulating... than for tightening...
even if doing so delays a useful innovation,” writes Professor Herzlinger.
Such inherent conservatism has provided centuries of examples of medical establishments rejecting
new ideas, the worth of which has later become well established. Even in the 19th century, doctors
were dismissive of the idea that hand-washing before surgery or assisting with birth might prevent
infection. A more recent example is that of medical information on the Internet. As recently as 2000,
the AMA warned patients against it, worried they might receive misleading advice. Today, the AMA
embraces it, and two-thirds of American physicians consider it a positive thing if patients come to
consultations armed with information from the web, according to a study by Manhattan Research.
Misaligned incentives: Healthcare innovation is not impossible—many companies and organisations
within the healthcare sector innovate perfectly well. However, innovation mostly takes place inside
existing systems, which means that changes must usually benefit existing stakeholders, including
incumbent providers. Dr Dixon of Nuffield Trust points to both top-down innovations, such as the
creation of NHS Direct—a nurse-led, medical advice telephone line—and bottom-up ones, such as an
after-hours cover service for GPs created by doctors themselves. The common element in both was not
so much the nature of the innovation, as they were pitched into an environment that was conducive to
them being maintained.
Incentive structures within healthcare are crucial to the success of innovation. But often they are
inadequate, or will even block change. Dr Amelung explains that in Germany there is little incentive to
innovate—inefficient performers do not risk losing their roles, and innovators cannot make a return
on investment. Ironically, he notes, the amount of cash in the German healthcare system may actually
impede change, by making everyone comfortable.
The normal practice of paying care providers for medical services rather than outcomes encourages
healthcare based on as much treatment as possible, not on what is necessarily most cost effective or
efficient. In The Innovator’s Prescription, Professor Christensen calls fee-for-service reimbursement
“a runaway reactor” fuelling costs, citing estimates that as much as one-half of US consumption of
healthcare “seems to be driven by physician and hospital supply, not patient need or demand.”
In the UK, for much of the last decade, the government’s efforts to reform the NHS have included
© The Economist Intelligence Unit Limited 2009Doctor innovation
Shaking up the health system
modifying incentive structures and introducing elements of “constructive discomfort”—competition
within the service and with outside providers. So far, the result has not been a dramatic increase in
the level of new entrants, but the threat of competition has driven existing elements in the NHS to
improve. Dr Dixon says that the relative success of the NHS in reducing waiting times for treatment
came about partly through edict, partly through new money, and in small part because “[the NHS was]
facing the direct threat of competition from independent treatment centres.”
To date, efforts to restructure how the system operates have had mixed success. Professor Crump says
“The most powerful he could still point to many examples of innovations that are widely seen as desirable, but which under
innovation in the current business processes would create significant financial disincentives. “The process of changing
coming decade will these incentives is a slow and complicated one,” he says. Dr Dixon nevertheless stresses the positive. She
be structural and says recent efforts have resulted in an evolution: “There is gradual change, but still quite a way to go.”
organisational— The military theoretician Karl von Clausewitz famously said: “Everything in war is simple, but the
new ways of simplest thing is difficult.” The accumulated challenges, small and large, which arise within a military
working, new team environment, together create an inconceivable friction. The overlapping barriers to innovation create
approaches to a parallel, debilitating friction for healthcare reform—which might explain the frequent use of battle
delivering the full analogies by healthcare innovators. “Lots of things seem to block innovation,” notes Dr Morrow of New
cycle of care.” Medical Limited. “It is difficult to maintain enthusiasm if every line you go over has barbed wire across it.”
Professor Elizabeth Teisberg, Most healthcare professionals to our survey identify patient-centred care as a key strategy for driving
University of Virginia, USA
down costs and improving standards of care. However, 40% say resistance from policymakers would be
the leading barrier to the introduction of patient-centred care, ahead of lack of political will (37%) and
general resistance to change from the medical community itself (28%). Improving the ability of health
systems to adopt innovation, then, will not depend so much on the creation of new ideas—which are
already legion—as on finding ways to let them advance. “The most powerful innovation in the coming
decade will be structural and organisational—new ways of working, new team approaches to delivering
the full cycle of care,” confirms Professor Teisberg of the University of Virginia.
There is no single formula to release innovation in healthcare. Various changes are necessary to
ensure that any changes to the underlying healthcare systems can have a lasting impact. Over the next
few chapters, this study looks at three such innovations in greater detail.
© The Economist Intelligence Unit Limited 2009Doctor innovation
Shaking up the health system
Going slow on the information superhighway
reported on a 2008 survey that pointed squarely at the lack of
incentives for individual physicians. Only 4% had complete EPR
systems, and another 13% had simpler ones. By contrast, 66%
said that the cost was the leading barrier to the purchase of such a
system, and 50% worried about return on investment.
In Germany, Dr Amelung has seen no progress at all on the
diffusion of EPRs. A lack of incentive to change plays a role, but so
does risk aversion. He recalls viewing an advanced record system at
an Israeli hospital when on a study trip with senior German health
executives. “The German group talked only about data security,
looking at what could fail, not at the added value for the patient,” he
notes. Given Germany’s advanced IT sector, he says, “we could have
© SNEHIT/Shutterstock
had electronic patient records for years. Attitudes and incentives are
One of the hottest topics in healthcare is integrated care. More than holding it back.”
20% of Americans, for example, suffer from more than one chronic In the UK, EPRs have been stalled by a traditional tale of
condition, such as diabetes, arthritis or heart disease. Potentially, bureaucratic innovation gone wrong. Launched in 2002, the
they will have several doctors. But they do not have access to all government’s £12.7 billion Connecting for Health programme—
their medical records, and may lack the knowledge to be able to the largest civil IT project in the world, designed to provide an
convey details of their treatments to every medical professional who EPR system for all NHS patients—is running at least four years
treats them. behind schedule. Officials will no longer even give an expected
A logical solution would be the provision of portable electronic implementation date, and pilot projects have gone so badly that
patient records (EPRs)—universal medical files accessible on demand hospitals designated for installation have requested delays. In
by care providers, allowing treatment decisions to be made in the March 2009, a leaked memo suggested that the Department of
context of the patient’s complete history. Proponents such as Dr Health had taken over policy control from Connecting for Health
Volker Amelung, president of the German Managed Care Association, officials, and was looking at allowing local procurement of systems
insist that without such records, “integrated care will not work.” around a national core rather than the single unified system
Despite their potential to improve care and reduce costs, the foreseen under the plan.
adoption of EPRs has been exceedingly slow. In our survey, only a Even when these problems are solved, others threaten to take
minority of medical professionals rate existing electronic storage their place. According to our survey, in each country the issues
and management of health data in their countries as good—23% described above were only the second most frequently cited
in the US, 21% in Germany, and just 12% in the UK. Most describe impediments to EPRs. Everywhere, respondents thought that
them as acceptable, or even basic. patient worries about privacy remained an even bigger, unresolved
Barriers to their implementation differ between countries, but concern. The barriers are different, but equally effective at blocking
the result has been the same. The New England Journal of Medicine the kind of innovation healthcare needs.
In your view, how would you rate the sophistication of the following aspects of IT and technology in your country’s healthcare system?
(% respondents; from Germany, India, UK and US)
Good Acceptable Basic Non-existent Don’t know
Electronic storage and management of patient/public health data
19 42 28 8 4
Operational IT systems (eg, patient bookings, administration, etc)
17 48 28 4 3
Hospital-based medical devices (eg, cardiac monitors, CAT scanners, etc)
37 44 14 1 3
Remote access healthcare devices (eg, devices to enable ambient living at-home patient monitoring systems, etc)
11 26 34 19 10
Useful online or telephone-based health information help/support
12 35 36 12 5
10 © The Economist Intelligence Unit Limited 2009Doctor innovation
Shaking up the health system
Share data to know what works
A s noted above, one of the big barriers to innovation is a lack of transparent data about the true
cost and effectiveness of medical intervention or even prevention programmes. Healthcare
commissioners, especially private insurers, are obviously interested in obtaining better results and
lower costs, and in the last decade the latter in particular have been increasingly gathering outcomes
data. UnitedHealth in the US, for example, has implemented programmes to collect outcomes on
complex cancers, cardiovascular care, and muscular-skeletal services, among others. Insurers pay
more to providers that achieve better results, and give patients incentives to use them, according to
Mr Stevens of Ovations, which is a subsidiary of UnitedHealth. This leads to superior service, and the
benefits of better medical results more than cover the cost of gathering the data.
In the UK, BUPA began several years ago to use a study of outcomes to change how it funded care
for back pain, abandoning the use of lengthy physiotherapy where it was statistically ineffective.
Again, patients were more satisfied and wasteful spending was cut. The NHS has been less enthusiastic,
but is coming round, building outcomes measurement into the commissioning process. According to
Professor Alan Maynard, a healthcare economist at the University of York, politicians have approved
NHS investment in patient-reported outcome measures even without overt public enthusiasm.
“Almost inadvertently, Whitehall policy wonks may be creating the building blocks for improved NHS
efficiency,” he says. This data, combined with cost and hospital episode statistics, has the potential to
increase provider transparency and accountability.2
Although American insurers have been engaged in this sort of activity longer than anyone, the
scope for information-led innovation is still immense. “Healthcare systems in all industrial countries
are still in the foothills of that kind of revolution,” says Mr Stevens.
Data mining in Minnesota
One model for even broader collection and dissemination of patient outcome information operates in
the US state of Minnesota. Minnesota Community Measurement (MCM) grew out of co-operation early
in the decade between non-profit insurance plans seeking improved care quality. A pilot project devised
suitable metrics, correlated with long-term positive outcomes, to create a measureable gold standard
in diabetes care provision by doctors and clinics (the D5). This led to the creation of a non-profit
organisation, which sought to use the same concept for other conditions, with various stakeholders as
members—insurance firms, the Minnesota Medical Association, healthcare providers, and patients and
employers. Now, the organisation’s website provides detailed, comparative treatment processes and,
where appropriate, patient outcome results for medical groups and clinics dating back to 2004.
Jim Chase, MCM’s executive director, explains that the approach was new because many people
2
www.commissioninghealth.
com/index_files/ at the time would have said that quality could not be measured. He notes that the organisation
v2n1Maynard.htm needed to be clearly structured so that the data was not seen as a tool of one vested interest group
11 © The Economist Intelligence Unit Limited 2009Doctor innovation
Shaking up the health system
or another. Most importantly, a multi-stakeholder approach has given a helpful balance on the
sort of information that it is desirable to obtain. Providers, for example, are less interested in cost
information than employers, but it is important that every side finds the output useful.
An emphasis on co-operation also helped to overcome one of the biggest early barriers to the
project—getting the clinical information necessary to measure the impact of care on patients.
According to Mr Chase, health plans had administrative data from claims forms, which did not
necessarily include results, and he was surprised that clinicians would themselves volunteer the data.
The clinics were right to take this leap—they may be the stakeholders making the most direct use of
the results. Comparative data has let them know how they are doing. In some cases, clinics found that
they were not accomplishing what they thought they were, says Mr Chase.
The results have been very positive.
l In the last five years in Minnesota, the number of diabetics achieving all their “D5” goals (lower blood
pressure, cholesterol and blood sugar, quitting smoking and taking aspirin) has more than tripled.
l The percentage of those for whom it is appropriate actually getting screened for breast, cervical,
and colorectal cancer has surpassed 50%, an increase of more than 5% in one year.
l Since 2006, the rate of childhood immunisation has jumped from 52% to 78%.
Mr Chase points out that while the data on its own did not bring the changes, it led to an environment in
which those doing well shared best practice. Nevertheless, the very fact of measuring has had an impact,
and in the diabetes case has even defined in practice the meaning of the goal of excellent care.
Innovation usually drives knock-on, unexpected change, and MCM is no exception. Mr Chase notes
that he had not expected that healthcare payers would use the data to create bonus payments to well-
performing providers. He hopes that the organisation will contribute to more change in the future.
MCM is looking, for example, at measuring knee and hip replacements, not just by which procedures
have the best results, with the hope that this can help clinicians and patients in making informed
Case study: Minnesota Community Measurement
n What it does: Collects and publishes comparative treatment
processes and, where appropriate, patient outcome results
online.
n Why it’s innovative: It has shown that it is possible to
overcome clinicians’ reluctance to gather and publish
transparent data about the true cost and effectiveness of
medical intervention.
n What it has achieved so far: Comparative data lets patients
and clinics know how they are doing. Locally, cancer
screening and childhood immunisation rates have shot up,
as has the number of diabetics reaching key targets. Future
goals include data gathering on long-term patient outcomes.
n www.mnhealthscores.org
© Minnesota Community Measurement
12 © The Economist Intelligence Unit Limited 2009Doctor innovation
Shaking up the health system
decisions about the best treatment in certain circumstances. Finally, he would like to see another
leap in the type of data gathered to consider long-term outcomes: “Did the patient get better? Is the
patient better off two years later?”
MCM is not the only organisation involved in such work. The number of US communities undertaking
this sort of reporting has grown to at least 14, Mr Chase says. In the UK, the NHS recently announced
that it would post online mortality rates for hospitals. In Germany, newspapers and magazines
have begun publishing comparative rankings of even specialist clinics. Nor are self-publication or
multi-stakeholder non-governmental organisations (NGOs) the only model for this type of work.
Outcomes Health Information Solutions of Charlottesville, Virginia, is one of the US’s fastest-growing
small companies, specialising in the acquisition and analysis of patient outcomes data. Meanwhile,
RateMDs.com, financed by advertising, publishes patient ratings for nearly 200,000 doctors across the
US. As outcomes reporting burgeons, Mr Chase is finding that providers in several areas are asking for
alignment between the various measuring organisations. The value of the work in Minnesota shows
that working through the problems of national quality measures will be worthwhile.
13 © The Economist Intelligence Unit Limited 2009Doctor innovation
Shaking up the health system
Let entrepreneurs get on with it
A nother barrier to innovation in healthcare is the systemic obstacles put in the way of innovators
not already within the system. Entrepreneurs, however, are outsiders who see things differently.
Nurturing all medically sound entrepreneurs, rather than just insiders, could create enormous change.
The problem is that the opportunity cost of this failure is invisible, but it is nevertheless real. In fact,
Mr Gutzeit of Stiftung Charité believes that the leading stumbling block to innovation in German
healthcare is that it is missing entrepreneurship.
Privatised screening
In his career as a GP, Dr James Morrow had two patients die of a burst abdominal aortic aneurysm
(AAA). The condition has very few symptoms before it leads to near-instant fatality. It kills about one
in 50 British males, making it a problem of similar magnitude to breast cancer, from which about one in
30 women die. After the deaths, Dr Morrow discovered that screening for the condition could be done
by ultrasound, following which a relatively simple surgical procedure could eliminate the danger for
those affected. The best evidence indicated overwhelmingly that a screening programme would be cost
effective for the UK’s NHS.
When he pursued the matter through the approved channels, however, he recalls that the
experience was like beating his head against a wall. “The response of the local NHS health sector was
that ‘it’s not that simple—this should be a national decision, and it doesn’t fit our strategic view’,”
he says. When he tried to raise the issue elsewhere in the NHS, he was told that it was not a national
priority. Convinced that screening should be available, both medically and ethically, Dr Morrow and
two colleagues with entrepreneurial experience—Dr David Berger and James Kraft—raised private
capital and set up New Medical Limited in 2002 to provide the service privately.
Case study: New Medical Limited
n What it does: Provides a private screening service for
abdominal aortic aneurysms (AAA), which kill about one in
50 British men.
n Why it’s innovative: The NHS was unwilling to launch a
screening programme, even though a simple operation could
eliminate the danger of AAA. Since its launch it has won
praise, and the NHS has pledged to launch its own service.
n What it has achieved so far: Screened about 15,000 patients,
one in 20 of whom had the condition, and one in 200 of whom
needed urgent intervention.
n www.newmedical.co.uk
© New Medical Limited
14 © The Economist Intelligence Unit Limited 2009Doctor innovation
Shaking up the health system
What do you think would be the biggest obstacles to establishing patient-centred care in your country's healthcare system?
Select up to three.
(% respondents; from Germany, India, UK and US)
Resistance from government policymakers
40
Co-ordination costs (eg, time, resources required)
39
Cost of implementing relevant technology/telecommunications
37
Lack of political will to change
37
Lack of skills among medical staff (eg, communication skills)
30
Resistance from medical community
28
Lack of relevant technology/telecommunications (eg, for remote monitoring of patients)
20
Uncertainties about long-term effect of approach
19
Resistance from patients
14
Other, please specify
4
Since its launch, New Medical has received strong support from medical experts and professional
colleagues in general, as well as high marks from users. The NHS, on the other hand, actively showed
its displeasure in various ways, says Dr Morrow. “We have experienced pressure to stop providing
“The response our services, not from patients, GPs or consultants, but from existing health authorities. Despite
of the local NHS convincing evidence that the testing we provide helps to save lives, some health authorities appear to
health sector was believe that equity of provision is more important than saving some lives through self-pay screening.
that ‘it’s not that The net result of such a policy is unnecessary preventable deaths.”
simple—this should Dr Morrow is no violent critic of the NHS—he still works as an NHS doctor, and is the co-ordinator
be a national of a new end-of-life care programme in Cambridgeshire which the service has chosen to fund as one of
decision, and it 16 integrated care pilot projects in the country. He adds that he has been “impressed by the desire to
doesn’t fit our innovate from the highest level, including politicians and senior officials.” Indeed, in our survey of medical
strategic view’.” professionals, the NHS, as well as the UK’s political leaders, scores higher than those of other countries in
Dr James Morrow, director
of medical operations, New its willingness to pursue innovation. Nevertheless, it matters where the innovation occurs. “The lengths to
Medical Limited, UK
which the establishment will go to resist independent innovation are substantial,” Dr Morrow says.
New Medical has yet to make a profit, but it has to date screened about 15,000 patients, one in 20
of whom had the condition, and one in 200 of whom needed urgent intervention. “We’ve probably
saved quite a few lives,” says Dr Morrow. The firm has now expanded to screening for osteoporosis—not
available on the NHS—and to providing a statistically far more effective screen than the NHS does for
bowel cancer. Against this must be set the melancholy statistics of what might have been. Dr Morrow
says that since 2002, when good evidence of the value of screening for AAA was published, 55,000
British men have died from the condition. He estimates that at least one-half of them could have been
saved if screening had been brought in early.
The NHS, however, does not seem geared for speed. The UK National Screening Committee did not
recommend screening for AAA until 2007, and as yet there is no programme in place. Entrepreneurship
is hard enough at the best of times, without having to overcome any additional barriers.
15 © The Economist Intelligence Unit Limited 2009Doctor innovation
Shaking up the health system
Innovation in India’s eye care
Another example of how big a contribution entrepreneurship can make can be found in India.
In 1976, at 58 years old, eye surgeon Dr Govindappa Venkataswamy retired from government
service to set up his own clinic. Helped by his sister and brother-in-law, who are also
ophthalmologists, he established an 11-bed clinic with the grand goal of eliminating avoidable
blindness in India, especially among the poor. Unable to convince financiers to back the venture, Dr
Venkataswamy mortgaged his house.
Within a year, the clinic had quadrupled in size. By 1981 a 250-bed hospital was open, and today the
multi-facility, financially self-supporting Aravind Eye Care System treats more than 2 million patients
a year, including a quarter of a million surgical operations. According to Aravind’s chairman, Dr P.
Namperumalsamy, the organisation provides 45% of eye care in the state of Tamil Nadu, or 5% or all
such services in the entire country.
One contributor to this success has been an ongoing flow of business model innovation. Dr Nam, as
he is known, points out that the first barrier to good eye care in a country like India was letting people
know treatment was even available. Millions of people in India suffer from full or partial blindness,
which in about 80% of cases is caused by easily treatable cataracts. Those affected, especially among
the rural poor, often assume either that there is no treatment, or that it would be unaffordable. “We
create a demand, an understanding, that if you have a cataract, a simple operation can work,” says Dr
Nam. “You can again support your family.”
From Aravind’s early days, its clinicians have gone out to provide care in nearby rural villages—
treating those they can on the spot and referring others for more advanced care in one of the
hospitals. More recently, the organisation found that only a small percentage of those with eye
problems used their temporary “eye camps”, so they set up permanent village out-clinics.
When the clinic began, the cost of eye care, even basic cataract surgery, was indeed too high for
many patients. This is a broader problem for India: according to our survey, lack of funding is the single
Case study: Aravind Eye Care System
n What it does: From small beginnings, Aravind now treats more
than 2 million eye patients in India a year, including a quarter
of a million surgical operations.
n Why it’s innovative: Its clinicians provide care in rural
communities to prove that most blindness is treatable, and,
importantly, affordable. All patients receive the same care
for free, but extras are charged for, so wealthier patients help
subsidise poorer ones.
n What it has achieved so far: Entrepreneurial innovation has
driven down costs: Aravind now makes its own low-cost
lenses and trains local villagers as paramedics to handle non-
medical work, freeing up doctors.
n www.aravind.org
© Aravind Eye Care System
16 © The Economist Intelligence Unit Limited 2009Doctor innovation
Shaking up the health system
biggest barrier to improved healthcare in the country (cited by 39% of respondents), followed closely
by the related difficulty of understaffing (35%). Rather than giving up or cutting corners, Aravind has
driven costs down through entrepreneurial innovation.
Rather than importing the artificial lenses used in cataract surgery from developed countries, which
cost hundreds of dollars, Aravind started making its own. These are ISO-certified, cost US$2-3 each, and
are now exported widely. The organisation has since begun manufacturing, where cost effective, the
pharmaceuticals needed by patients, and even the surgical equipment and sutures used in operations.
Aravind trains local villagers, usually young women with a high school education, as paramedics
to complete all non-medical work, undertake routine investigations, and to help in theatre. “You can
employ 20 doctors or 200 paramedics—the quantity is more and the quality is the same,” says Dr Nam.
“We make the best use of available resources.”
This leaves doctors free to concentrate on where they add most value, in particular the actual
operations. According to Dr Nam, each doctor can do eight to ten surgeries per hour, instead of the
typical one to two in a state facility. Economies of scale come into play—the more operations that are
done, the cheaper they become.
Even inexpensive surgery, however, is beyond the scope of many budgets. Dr Nam’s statistics
indicate that about 15% to 30% of patients cannot afford to pay any amount. Accordingly, Aravind
needed an innovative pricing structure. Now, everyone receives exactly the same care for free. The
hospital charges, however, for after-care accommodation. Those who wish, and have the means, can
pay for a private recovery room with hot meals; those with less can pay to sleep on a straw mat; and
those with absolutely nothing can recover at home. In effect, the better off subsidise the poor, but do
so voluntarily by paying for services.
The search for improvement does not stop. Some time ago, for example, the organisation invested in
a teleconferencing capacity to allow doctors to take part in joint seminars with Johns Hopkins University
in the US. Recently it adapted this technology to create mobile telemedicine vans that allow screening of
diabetics in rural villages, with the images beamed to doctors in the main clinics. This meets a pressing
need in a country with 45 million diabetics and just 12,000 ophthalmologists. Dr Nam comments: “We
always encourage innovation. Not only doctors and managers, but if anybody suggests something we
always follow it up. Each week we have a meeting to look at suggestions on how to improve.”
Others are taking note: nearly 250 hospitals have come to the Aravind clinics to learn how to
improve. The knock-on effect of innovation is substantial, but not infinite. Dr Nam makes clear that
only eye hospitals have shown interest in the Aravind model. Eye problems are tangible in outcome, so
quickly achievable results create great demand.
India is no poster child for deregulation, but Aravind’s success in large measure comes because it
was allowed to get on with it, in a way that would simply have been unlikely in developed countries.
17 © The Economist Intelligence Unit Limited 2009Doctor innovation
Shaking up the health system
Put the patient back in the centre
H ealthcare, intuitively, should focus on its customers, rather than caregivers. But Professor Teisberg
of the University of Virginia believes that healthcare systems are typically set up around hierarchies,
rather than patient needs. “If they were set up around patient needs, we would set up care cycles around
solutions for patients and families,” she says. Innovation of that kind has little to do with the specifics
of medical knowledge. It is about business practice. “Integrated care is nothing other than product
“It makes a big design,” says Dr Amelung of the German Managed Care Association. “What counts is how everything
difference to who works together. It makes a big difference to who has to be involved and how you set incentives if you
has to be involved look at what the product is like from the patient perspective.” Professor Crump says his NHS institute is
and how you set a strong proponent of experience-based design, arguing that it is natural to work with patients on how
incentives if you services are delivered. His organisation has used emotional mapping of patient reactions at different
look at what the points in the care cycle, which then feed into a process where clinicians and patients are partners in
product is like redesigning the details of care. “Even very good services with high-quality clinical outcomes and good
from the patient patient feedback have nonetheless found that if they adopt these approaches, they bring about tens or
perspective.” scores of small changes, and get significant enhancement of the patient experience,” he says.
Dr Volker Amelung, president, Just thinking hypothetically in this way can yield great value. A Swedish project of the late 1990s
German Managed Care
Association and Professor involved healthcare professionals trying to think through the patient flow process from the perspective
for International Healthcare
System Research, Medical of Esther, an imaginary, elderly but competent woman who has various things go wrong in different
University of Hannover, scenarios. Changes resulting from the innovations identified by the Esther Project were dramatic:
Germany
within a five-year stretch, for example, hospital admissions in the Esther catchment area fell by 22%.3
A fragmented care system, on the other hand, throws up a host of incentives which focus on specific
aspects of care, but in so doing become impediments to improving overall patient care, and even
hinder innovation. There are many examples: in most countries, hospitals are reimbursed for the
length of time a patient stays, rather than how quickly care is provided. Obviously, simply paying more
for shorter stays would create perverse incentives—a focus on the value of the treatment to the patient
would be more appropriate.
The impacts of disjointed incentives are diverse. One reason, for example, that telephone
consultations are so rare in the US is simply that Medicare does not pay for them.4 More worryingly,
Professor Teisberg explains, “in the United States in particular, we do not have a good focus on
3
http://www.ihi.org/IHI/ diagnosis, because we don’t pay directly for diagnosis, and what we do pay is determined only after
Topics/Flow/PatientFlow/
care is delivered.” As a result, a majority of malpractice suits involve misdiagnosis, delayed diagnosis
ImprovementStories/
ImprovingPatientFlow or failure to diagnose. And it gets worse: “When you have a wrong diagnosis, all of the care that you
TheEstherProjectinSweden. deliver is wasted, and increases the risk to the patient,” she says.
htm. When incentives map onto overall patient needs rather than individual health services, many of
4
John C Goodman, Perverse these incentives disappear. Care not only improves, but also becomes cheaper. In fact, according to
Incentives in Health Care, our survey, 81% of medical professionals believe that patient-centred care will be either critical or
Wall Street Journal online,
April 5th 2007.
important for reducing overall healthcare spending. Insurance companies are frequently cited as
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